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On the willingness to pay to reduce risks of small losses

Journal of Economics volume 95, pages 75–82 (2008)Cite this article

Abstract

While willingness to pay is a common concept to measure the benefit gained from a reduction in the probability of loss, it is still questionable how it is linked to risk aversion and risk elimination behaviors, and how it is affected by the presence of an exogenous source of risk. By focusing only on risks of small losses, this article sheds light on these three issues and provides new results on the determinants of the willingness to pay.

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Authors and Affiliations

  1. The Geneva Association, 53 route de malagnou, 1208, Geneva, Switzerland

    Christophe Courbage

  2. ISFA, Université Lyon 1 - Université de Lyon, 50 Avenue Tony Garnier, 69366, Lyon Cedex 07, France

    Béatrice Rey

Authors
  1. Christophe Courbage
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  2. Béatrice Rey
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Corresponding author

Correspondence to Christophe Courbage.

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Courbage, C., Rey, B. On the willingness to pay to reduce risks of small losses. J Econ 95, 75–82 (2008). https://doi.org/10.1007/s00712-008-0016-0

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  • DOI: https://doi.org/10.1007/s00712-008-0016-0

Keywords

  • Willingness to pay
  • Small loss
  • Risk aversion
  • Background risk

JEL Classification

  • D81